Profit Tracker: Feeder Margins Hit Triple Digits

A $4 rally in cash cattle prices lifted average feeding margins above $100 per head the final days of 2018.
( Wyatt Bechtel )

A rally in cash cattle prices the final full week of 2018 boosted average cattle feeding margins to $103 per head, according to the Sterling Beef Profit Tracker. Packer margins slipped slightly to $136 per head as cash fed cattle prices rallied $4.66 per cwt. to $122.96.

The beef cutout advanced $2.31 per cwt. to $213.93. The cost of finishing a steer last week was calculated at $1,582, which is $19 lower than the previous week and $46 lower than the same week a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were earning an average of $48 per head. Feeder cattle represent 71% of the cost of finishing a steer compared with 73% a year ago.

Farrow-to-finish pork producers saw their margins unchanged with average losses of $26 per head. Lean carcass prices traded at $46.54 per cwt., $0.17 per cwt. lower than the previous week, and $4.65 lower than a month ago. A year ago pork producer margins were positive by $4 per head. Pork packer margins averaged a profit of $42 per head last week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2018 averaged $161 per cow. That would be steady compared to the $164 estimated average profit for 2017. Estimated average cow-calf margins were $176 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka projected an average profit of $21 per head in 2018, which would be $160 less than the average of $181 per head in 2017. Nalivka expects packer margins to average about $168 per head in 2018, up from $120 in 2017.

For farrow-to-finish pork producers, Nalivka projected 2018 profit margins to average a profit of $2.50 per head, compared to profits of $21 in 2017. Pork packers are projected to earn $19 per head in 2018, down from $25 profit per head in 2017.